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TMI Blog2015 (4) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... out any change in any substance for the manufacture of final product, it would qualify as 'capital goods' and MODVAT credit thereon would be permissible. In the process, the court also explained that there is no warrant for limiting the meaning of the expression "in the manufacture of goods" to the process of production of goods only. In the opinion of the court, the expression "in the manufacture" takes within its compass, all processes which are directly related to the actual production. It noted that goods intended as equipment for use in the manufacture of goods for sale are expressly made admissible for specification. The court further marked that drawing and photographic materials falling within the description of goods intended for use as "equipment" in the process of designing which is directly related to the actual production of goods and without which commercial production would be inexpedient must be regarded as goods intended for use "in the manufacture of goods". Order of the Commissioner that in spite of taking note of the aforesaid use of the railway tracks and accepting the same as correct, the Commissioner denied the relief to the appellant on an extraneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of this item which credit is wrongly reversed by the authorities below - Decided in favour of assessee. - Civil Appeal No. 8554 of 2003 - - - Dated:- 13-3-2015 - A. K. Sikri And Rohinton Fali Nariman,JJ. For the Petitioner : Mr. V Lakshmikumaran, Adv. Mr. M. P. Devanath, Adv. Mr. R. Ramachandran, Adv. Ms. L. Charanaya, Adv. Mr. Aditya Bhattacharya, Adv. Mr. Prashanth S. Shivadass, Adv. Mr. Vivek Sharma, Adv. For the Respondent : Mr. K. Radhakrishnan, Sr. Adv. Mr. Sanjai Kumar Pathak, Adv. Mr. T. C. Sharma, Adv. Ms. S. Manchanda, Adv. Mr. B. Krishna Prasad, Adv. JUDGMENT A. K. Sikri, J. This appeal arises out of the judgment/ final order dated 30.04.2003 passed by Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'CEGAT') whereby the Tribunal has dismissed the appeal of the appellant thereby confirming the order of the Commissioner insofar as it denies the appellant MODVAT credit on some of the capital goods and parts which were detailed in the show cause notice issued under Rule 57Q of the Central Excise Rules, 1944 (hereinafter referred to as 'Rules'). The dispute has arisen in the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the Rule 57Q, in the form in which it existed then, is reproduced as here-in-below: - RULE 57Q. Applicability.- (1) The provisions of this section shall apply to finished excisable goods of the description specified in the Annexure below (hereinafter referred to as the final products ) for the purpose of allowing credit of specified duty paid on the capital goods used by the manufacturer in his factory and for utilising the credit so allowed towards payment of duty of excise leviable on the final products, or as the case may be, on such capital goods, if such capital goods have been permitted to be cleared under rule 57S, subject to the provisions of this section and the conditions and restrictions as the Central Government may specify in this behalf: Provided that credit of specified duty in respect of any capital goods produced or manufactured - (a) in a free trade zone and used for the manufacture of final products in any other place in India; or (b) by a hundred per cent export-oriented undertaking or by a unit in an Electronic Hardware Technology Park [or by a unit in Software Technology Parks] and used for the manufacture of final products in any place in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impossible or commercially inexpedient, goods required in that process would fall within the expression in the manufacture of goods . For goods to answer that description, it is not necessary that they must of necessity be goods which are used as ingredient or commodity in the creation of goods , or which are directly and actually needed for turning out or making of the goods. Though the court was concerned with the construction of Section 8(3)(b) of the Central Sales Tax Act, 1956, and Rule 13 framed under the said Act, the expression in the manufacture or processing of goods for sale appearing in Section 8(3)(b) came up for interpretation. Section 8(3(b) authorises the Sales Tax Officer to specify goods intended for use by the dealer in the manufacture or processing of goods for sale or in mining, or in the generation or distribution of electricity or any other form of power. Rule 13 provides that such goods must be intended for use in the manufacture or processing of goods for sale or in mining or generation or distribution of power. The aforesaid expression interpreted by the Court, therefore, becomes relevant for our case as well. The test laid down by the Court an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding materials as well as electronics goods, by pointing out the aforenoted distinction in the following manner: Building materials including lime and cement not required in the manufacture of tiles for sale cannot, however, be regarded within the meaning of Rule 13, as raw materials in the manufacture or processing of goods or even as plant . It is true that buildings must be constructed for housing the factory in which machinery is installed. Whether a building is a plant within the meaning of Rule 13, is a difficult question on which no opinion need be expressed. But to qualify for specification under s. 8(3)(b) goods must be intended for use of the nature mentioned in Rule 13, in the manufacture of goods. Building materials used as raw materials for construction of plant cannot be said to be used as plant in the manufacture of goods. The Legislature has contemplated that the goods to qualify under s. 8(3)(b) must be intended for use as raw materials or as plant, or as equipment in the manufacture or processing of goods, and it cannot be said that building materials fall within this description . The High Court was, therefore, right in rejecting the claim of the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on tippler to stacker reclaimer where stacking and reclaiming of raw material is taken place and required quantity is conveyed for further processing at stock house. It reflects that the appellant has installed railway tracks within the plant which is a handling system for raw material and processed material. The aforesaid process squarely meets the test laid down by this court in M/s. J. K. Cotton Spinning Weaving Mills Co. Ltd.'s case. It is clear that the railway tracks are installed not only within the plant, but the main objective and purpose for which the capital expenditure on laying these railway tracks is incurred by the appellant is for transporting hot metal in ladle placed on ladle car from blast furnace to pig casting machine through ladle car where hot metal is poured into pig casting machine for manufacture of pig iron. It is clear from the above that the use of railway tracks inside the plant not only form the process of manufacturing, but it is inseparable and integral part of the said process inasmuch as without the aforesaid activity for which railway tracks are used, there cannot be manufacturing of pig iron. We find from the order of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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